OTT Advertising is a form of advertising that enables you to serve ads on an internet-based, non-skippable, and immersive content format. Advertising on OTT platforms allows advertisers to engage with a unique audience that is committed to the content it is consuming.
As one of the fastest-growing digital products of the past 5 years, there is an incredible opportunity for your agency to sell OTT Advertising. In this guide, we are going to break down everything you need to know about OTT and how to make money selling OTT Advertising.
What IS OTT?
OTT stands for Over-the-Top Television, which originally referred to the devices that go “over” a cable box to provide the user access to TV content such as Roku or AppleTV. In OTT channels, content is delivered via the internet rather than through a traditional cable/broadcast provider.
A connected TV, also called CTV, is a television or connected device with an internet connection and a UI that enables users to access OTT content through applications.
Is OTT content delivered to all devices, or just to the TV screen? This should be an easy question right? Well, believe it or not, the digital marketing industry is fairly split on how to actually define ott.
- 50% of people believe OTT is “streaming video that appears on any screen (TV, Mobile, Desktop, Tablet) other than live TV.
- 48% of people believe OTT is “streaming video that appears on a TV screen other than live TV”
At Conduit Digital, we believe the latter and have aligned ourselves with the IAB (Interactive Advertising Bureau) by defining OTT as “Video content transported from a video provider to a connected device over the Internet outside the closed networks of telecom and cable providers.” To put it simply, we define OTT as
Video content, delivered via a connected device, to the Television Screen
We chose to include the Television screen in our definition as we believe this clarifies the value prop of OTT and focuses on it’s biggest strength… harnessing the power of the largest screen in the house!
OTT advertising is an internet-based, non-skippable, immersive content format where advertising is delivered directly to viewers over the internet through streaming video services or devices, such as smart or connected TVs.
OTT has the ability to run on multiple devices ranging from Smart TVs, gaming consoles, Apple TV, Roku, Amazon Fire TV to Chromecast giving advertisers the ability to reach their target audience no matter where they consume content.
But reaching your target audience is just half the battle, it is of the utmost importance to put a high-quality advertisement in front of your audience.
To ensure your ad is quality make sure to include your brand’s logo and provide your ad in multiple different lengths to ensure you are not missing quality users because of inventory availability.
Make sure to include the website and phone number of the business and have a clear message on what the product or service is you are promoting.
When it comes to running on specific inventory, like Hulu, for example, it is also important to check if they have their own specific creative requirements. This can often be the case, and could potentially be limiting your ads from serving even though they may not have any issue serving to open exchange inventory!
Growth of OTT
OTT has seen a tremendous amount of growth from its inception in the early 2010s. According to emarketer in 2017, there were 153M OTT subscribers 55.7% of internet users growing to 170.1M (60.8%) in 2018, and 181.5M (63.9%) in 2019. Growing over 18% from 2017 to 2019 and is expected to reach a market size value of $332.52 billion by 2025 (Allied Market Research).
With more and more people “cutting the cord” and migrating away from traditional television OTT is leading the way to be the new norm for users to consume content. Users want to consume the content they want when they want and before OTT there wasn’t a viable option for them to do so until the emergence of OTT.
With the growing costs of cable network bundles and the set lineup for content users are seeing more and more benefits to cutting the cord and controlling their own content.
Backing this is the mass flooding of the OTT network from some of the largest entertainment companies in the world. According to TechRadar Netflix still leads the way as the top streaming service with 182.8 million subscribers, followed by Amazon Prime Video with an estimated 112 million subscribers in the US, Disney+ surpassing 50 million, Hulu with 30 million.
We have already seen the likes of YouTube TV, HBO Now, Sling TV, Crunchyroll, Apple TV, and Crackle round out the top 10 streaming services. With the emergence of Comcast launching Peacock and others like Quibi and HBO Max already entering the market, there are more and more options for users to consume content.
The Biggest Benefits of OTT Advertising
With the emergence of OTT Advertising as a major digital marketing platform, you may be wondering to yourself, “What does it have to do with my agency?”
There is an amazing opportunity for your agency to sell OTT Advertising. Here are some of the biggest benefits for your agency to sell OTT Advertising.
Big Screen Viewing
When users are enjoying the content they want via an OTT device they are most likely watching on the biggest screen they have in the house, their television. This is a substantial benefit to OTT advertising, usually, people are consuming content on their televisions with others.
Giving your single impression multiple sets of eyeballs increases your brand’s exposure and ability to reach more unique users while influencing drive, recall, engagement, consideration, and influence purchasing behavior.
With OTT you have the unique ability to target audiences that have already shown an interest in your brand, products, and services that traditional television advertising just simply cannot provide.
With the ability to target users based on their behaviors and interest it is almost guaranteed you are reaching your target audience every time your Ad is shown on the big screen.
When you use the full power of OTT to gain brand exposure your single commercial is most likely being viewed by multiple sets of eyeballs but you are only charged on a 1-to-1 rate.
According to studies by IAB, OTT has an estimated 1.94 co-viewing rate compared to traditional linear TV with a 1.86 co-viewing rate. With OTT you get maximum brand exposure for your advertising dollars.
Pairs Perfectly With Traditional TV Advertising
Why not pair OTT with your traditional television advertising media plan? If you are running your commercials on traditional television and not on OTT platforms simultaneously then you are missing a huge audience that your traditional television ads could be missing.
OTTs audience targeting capabilities and its power to maximize your brand’s exposure to those target audiences is a huge asset to any agency and it’s clients. Pairing OTT and its highly engaged audiences with traditional television advertising only helps create more brand exposure while increasing brand recognition and recall.
Users on OTT platforms are more engaged with the content they are consuming rather than most watching traditional television and this is proven by OTT’s outstanding video completion rate (VCR) of 97% according to Forbes.
This means users are not switching programs due to advertising they are sitting and engaging with these ads because they chose the content they wanted to consume making them more invested, pair that with traditional television advertising now when a user sees your ad again on traditional television you just created a connection through brand recall.
Targeting Capabilities of OTT
One of the biggest differences between Traditional Television and OTT is the targeting capabilities. Below, you can find all the ways OTT campaigns are able to target users and hone in on only the most relevant of audiences.
With nearly 60% of Americans ‘cutting the cord’ and replacing traditional TV with OTT, finding ways to take advantage of all of these capabilities is becoming more important every day!
Geographic targeting is one of the most advanced location-based advertising techniques for targeting users based on a specific and sought after geographic area.
This offers you the ability to accurately geo-target potential customers across connected and streaming platforms. This enables you to capture your audience’s location within a country, media market, city, state, zip code, and/or radius requested.
Streaming Service & TV Application Whitelists
At Conduit Digital, our OTT team has put in countless hours finding the right Streaming Services and TV Applications to serve your client’s ads on.
The team has identified over 1,000 domains to only serve where relevant audiences will see your clients’ ads while also driving great performance. These whitelists can be layered with other targeting tactics to combine for some really advanced targeting.
Is there a more ideal user to target than someone that has previously shown interest in your client by visiting their website? Did you know that 96% of users who visit a webpage will leave without ever converting to a lead or sale?
Well, by utilizing Site Retargeting, OTT is able to serve ads to these users who have previously visited the client’s website!
Email Retargeting is a powerful way to reach an audience that is interested in your client’s industry!
OTT campaigns have the ability to create custom audiences of users based on their subscriptions and newsletter emails they receive.
Purchase Receipt Retargeting
Just like Email Retargeting, Purchase Receipt targeting uses emails that users receive to build a custom audience.
The difference, however, is these users have received receipts after purchasing something online. For example, if someone just received an email receipt for a dog collar, they could be categorized within a ‘dog owners’ audience.
Search Behavioral targeting allows for custom audience creation based on a list of keywords that are relevant to your client’s campaign. Behavioral targeting enables advertisers to combine the effectiveness of search with the brand impact and reach of OTT targeting.
Point of Interest (Geo-Fencing)
Point of Interest (POI) targeting, sometimes called Geo-Fencing, utilizes multiple data sources to pinpoint a user’s exact whereabouts, allowing clients to target competitors’ locations and other relevant physical locations where their target audience may frequently visit.
POI targeting can also be coupled with foot traffic attribution, so your clients will know how many times someone visits their business after viewing an ad!
At Conduit Digital, we found that users who were served one of our clients’ ads after visiting a brick and mortar location were about 3 times more likely to convert than those who visited the same targeted locations but were not served an ad!
Demographic & Interest/Affinity
OTT campaigns are able to reach users based on their demographic and psychographic affiliations utilizing first and third party data.
In terms of demographics, your clients’ ads can be targeted towards people based on things like their age, gender, income, education, and marital status.
This can be paired with the ability to target user’s interests, like coffee drinkers, fitness enthusiasts, and musical instrument buyers to really put the ads in front of the most relevant audiences!
In-Market or Intent
Intent targeting can be utilized to target users who have shown behaviors putting to them in-the-market to buy a specific product.
This is a great opportunity to target users who may be searching on competitors’ websites or doing research on which specific brand they should spend their money on.
While it is important to always try to reach the right audience, it is just as important to reach that audience at the right time. With dayparting, your OTT campaign will have the capability to serve your clients’ ads during the time of day users are at their most engaged.
The success of OTT as a revenue-generating platform for both content creators and advertisers has seen an explosion of OTT platforms. Here are a few of the OTT platforms that Conduit Digital has seen incredible success serving our clients’ ads on.
Pluto TV is a FREE internet-based streaming service. Pluto TV has become one of the most popular OTT applications in the market with 22 million active users as of December 2019.
Pluto TV generates revenue through OTT advertising in between programming, keeping their more than 250 channels free of charge making it a very popular option for cord-cutters and everyone alike.
Xumo is a free live and on-demand streaming service with over 190 channels for users to consume their content of choice. Xumo reports having 5.5 million monthly active users watching popular channels such as NBC News Now, ABC News Live, Newsy, and Bloomberg TV.
Tubi TV is a free, ad-supported streaming service, with advertisements shown during commercial breaks between programming. It is the largest independently-owned video service in the United States since Pluto TV’s acquisition by Viacom.
As of June 2020, Tubi TV offers more than 20,000 films and TV series with deals from major content creators such as NBCUniversal, Lionsgate, and Warner Brothers. Tubi has over 25 million monthly active users watching 163 million hours in December 2019, up 160% year-over-year.
Sling TV is a subscription-based streaming service with advertisements shown in between programming. Since Sling's debut in February 2015, it has 2.59 million users in the United States with over 50 networks such as ESPN, TNT, and AMC available.
Hulu, which was recently acquired by the Walt Disney Company, is a subscription-based OTT streaming service, providing live television programs as well as on-demand.
In the second quarter of 2020, The Walt Disney Company reported that Hulu had 32.1 million paid subscribers, up from 25.2 million in the corresponding quarter of the previous fiscal year. Hulu offers upwards of 60 live channels as well as their full library of content.
AT&T tv Now
AT&T tv Now, formerly Directv Now, is a family of streaming multichannel television services offered in the United States by AT&T.
With over 1 million subscribers, providing a range of over 60 channels for users to consume their content of choice showing advertisements in between programming.
Learn Why OTT Is The Perfect Extension Of Traditional TV Advertising
Over-the-Top Television is a top-of-the-funnel product and specializes in creating brand awareness. Measuring the total reach for an OTT campaign is not an easy task, but there are multiple ways to report on the full performance of a campaign.
Transparency is key here, as you will want to see all the nitty-gritty metrics and everything your ad dollars have paid for!
Important OTT Reporting Metrics
The first thing that should be on every report would have to be exactly what your money is paying for: impressions and completed views. Please note, these two things are not the same thing.
The number of impressions is exactly how many times your ad was served to a consumer. A completed view is exactly what it sounds like: how many times an impression was watched to completion.
From these two metrics, your report should calculate the most important OTT KPI: video completion rate, or VCR. VCR is square one for understanding the efficiency and effectiveness of your [OTT] campaign. VCR is a measurement of the rate at which your digital video impressions play to 100%.
By reporting on the percentage of impressions that were watched all the way to the end, you will be able to get a good idea of exactly how much reach or brand awareness your OTT campaign has resulted in.
“High VCRs result in more time spent with your message and a lower cost-per-view.”
On top of the overall campaign performance, it is important to also have specific targeting level metrics. OTT has a variety of ways to target different audiences, so it is important to see how many impressions might be allocated to targeting a certain demographic or to see the VCR driven by targeting users who are in-market for your client’s industry.
Another important thing to be included in all OTT reporting is a list of domains that your ads are serving. This list will allow you to see all the different streaming services or tv applications that are serving ads for your campaign.
This should also include the number of impressions as well as the VCR by domain. The domain list is extremely important to know as it is very easy to serve impressions to pre-roll inventory instead of OTT, which is a completely different way to serve ads.
A pure CTV OTT campaign should produce a VCR of at least 90%, so if your campaign is lower, take a look at what domains it is serving on.
What To See. What NOT To See
While it's important to know what you should be seeing in your OTT reports, it is also important to know what you shouldn’t. If you are running an OTT campaign that is driving clicks, you may be spending money on something that you didn’t want. OTT ads are not clickable, so any amount of clicks means your ads have been serving on non-OTT inventory.
Some OTT reporting will include the device types that your campaign has been serving on. This could include CTV, desktop, mobile, or tablet. Again, as stated earlier, OTT is simply described as ‘video content, delivered via a connected device, to the Television Screen.’
If your reporting includes impressions served to different devices, make sure the majority is spent on CTV. People watching OTT on CTV are much more engaged and drive a higher VCR. Also, a high impression share on the other devices could mean your OTT campaign is a blend of OTT and pre-roll.
Lastly, but certainly not least, OTT reporting should always include daily impression delivery, as well as hourly delivery. It is important to see that your campaign is not taking any days off.
A well-oiled OTT campaign should be delivering a steady number of impressions each day, while also avoiding times where users are likely to be less engaged. By utilizing dayparting, your OTT campaign should avoid certain times of the day, like between midnight and 6 am. This will help your campaign avoid serving to users who have fallen asleep.
Why Should My Agency Sell OTT Advertising? Why Would My Client Buy It?
OTT, CTV, and Internet TV are popular buzzwords in the digital advertising world, and rightfully so. Based on the significant video advertising shift towards OTT Television, agencies are missing more than just the boat if they are not including it within their product suite.
At Conduit Digital we like to call it “Tra-Digital” because OTT is the perfect extension of traditional advertising but with the power of digital targeting.
The explosion of 170 million OTT users was led by streaming on Smart TVs and devices like Roku, Amazon Fire Stick, Google Chromecast, and Apple TV that allow them to access television content for free through the internet. Powerful OTT applications like Pluto TV, ABC News, Sling TV, ESPN, and NFL allow viewers more live TV and on-demand content than they can possibly consume.
When it comes to brand awareness, OTT is king. CTV delivers commercials with an average Video Completion Rate of more than 90% and those ads are non-skippable! High video completion rates mean high engagement and relevance.
Here are our Top 4 reasons to add OTT and CTV to your digital advertising lineup and why your clients would be smart to utilize it:
Connected TV advertisers are able to target the largest screen by household giving advertisers the capability of targeting audiences with a great likelihood of reaching multiple viewers at once when factoring in co-viewing.
According to IAB, most platforms are watched with others, with a rate of ~65% watching together as opposed to only ~35% watching alone, with up to 76% of OTT users watching with other people!
Superior Targeting Capabilities
Whether it's targeting users based on their online behaviors, demographics, or physical location, there is no doubt that targeting your specific audience is much easier than traditional TV.
As explained in the Targeting Capabilities section, there are multiple ways to find potential customers on the internet and serve them an ad at the right time.
Live and Dynamic Reporting
Be transparent with your clients. Conduit campaigns come with advanced reporting capabilities giving agencies and advertisers data on delivery by day, application by keywords and helps to inform other marketing plans.
VCR and Domain transparency allows clients to see the percentage of their commercials that are being watched from start to finish and what streaming services or TV apps their ads are served on.
CTV advertising offers an industry VCR rate of more than 90% and is exceptional for advertisers looking to improve brand awareness and reach.
In 2019 IAB reported there are now over 97 million homes that have a CTV, equating to over 75% of all homes in the USA, surpassing cable TV households (89 million). A study by Roku shows that 31% of the US population are cord-cutters or cord-nevers.
With this, Roku predicts that this number could double to a total of 60 million households by 2024. They also explain that 82% of cord-cutters are happy with their decision to cut the cord in favor of streaming services and OTT providers.
People are very quickly realizing that OTT is the future of the television space, and it is important for the advertisers to follow!
Learn How OTT Is Going To Skyrocket With The Roll Out of 5G
OTT advertising is the fastest growing digital marketing product. In fact, the data suggests that it will only keep growing. Here are some important trends currently happening in Over-the-Top marketing:
- 61% of Americans own a Smart TV (or CTV)
- 52% of Americans use OTT services
- For viewers between the ages of 18-34, OTT usage is over 65%
- The average OTT customer owns up to three OTT devices they can use to watch OTT content and subscribe to different services
- People spend more time watching OTT content than they do driving a car or talking to friends and family
As OTT services gain more and more popularity, this presents grim news for cable, satellite, and broadcast providers/advertisers. Cord-cutting millenials are supplanting aging baby-boomers as the primary consumer target. In fact:
- Millennials who subscribe to at least one OTT service watch more than twice as much OTT content as they do live TV.
- The top content that people want is movies, followed by scripted TV shows. Live news and sports, thought to be the killer app keeping broadcast and cable alive, rank #3 and #4 respectively across all demographics.
- Fewer than 40% of Millenial OTT users plan to keep their cable package. The amount of cord-cutters is rising exponentially.
- Nearly ⅔ of cord-cutters are more like “cord burners;” they say that cutting cable has noticeably improved their life and there is nothing a cable company can do to lure them back into having a bundle.
It is no lie that OTT audiences are growing at an awesome rate, however, some people may argue that most of these users just subscribe to Netflix and never even see any ads.
According to IAB, 73% of adults 18+ who typically watch streaming video say they watch ad-supported OTT video, AND on top of that 45% of adults 18+ who typically watch streaming video say they watch ad-supported OTT video MOST out of streaming videos. So while Netflix may be king at the moment, people are still watching ad-supported OTT.
How A White Label OTT Advertising Partner Can Help Your Agency Make More Money
From rapid audience growth to enhanced targeting capabilities, OTT is a raw, but still very powerful brand awareness generator. People seem to be flocking to different streaming platforms to catch the latest binge-worthy series, while also showing great engagement with the ads presented in front of them.
As the user base moves from traditional TV towards a more modern OTT-filled solution, will your clients be more progressive and start reaching an audience that has proven to show effectiveness?
If you have decided that white-labeling your OTT advertising services is right for your agency, it is important to understand what to look for in a white label partner.
Ultimately, the agency you choose to provide you with white-label digital services has to align with your vision and goals for your company. With a vast sea of potential partners on the market, which white-label provider is right for you?
In an ever-changing world, OTT has shown to be no different. From rapid audience growth to enhanced targeting capabilities, OTT is a raw, but still very powerful brand awareness generator.
People seem to be flocking to different streaming platforms to catch the latest binge-worthy series, while also showing great engagement with the ads presented in front of them. As the user base moves from traditional TV towards a more modern OTT-filled solution, will your clients be more progressive and start reaching an audience that has proven to show effectiveness?